Singapore Press Holdings (SPH) has seen a 45.2% drop in net profit of SG$28.9 million when compared to the same period last year. This was reported in its financial results for the third quarter which ended 31 May 2017.
According to a press statement, SPH attributed the drop in profit to an impact of impairment charges of SG$37.8 million. This was primarily due to the magazine business whose performance continued to deteriorate further amid unfavourable market conditions. The group said, excluding the impairment charges, group recurring earnings would have fallen by 19.2% at SG$17.1 million due to decline in media revenue.
Currently at the operating level, group recurring earnings are at SG$34.3 million, 43.6% lower year-on-year (yoy).
According to SPH, group operating revenue fell by 10.8% to SG$260million due to weak performance of its media business. This was a result of the “disruption of the media industry” and a “muted economic environment”.
The media business saw a 15.7% dip in operating revenue. This comes as advertisement revenue falls by 18.7% yoy by SG$34.1 million. Meanwhile, circulation revenue declined 10.6% or SG$4.8million. This was compared against the third quarter results in 2016.
Besides the decline in media revenue and the impairment charges, other major factors impacting the results were also restructuring charges in the first quarter of 2017. This totalled SG$53.7 million, as compared to an impairment charge of SG$28.4 million in the corresponding period last year.
On the cost front, the press statement read that SPH continued to exercise stringent cost discipline. Excluding impairment charges, total costs were 6.7% lower yoy despite inflationary pressures at SG$193.6 million.
SPH’s property segment grew by 2% yoy or SG$1.2million in terms of revenue growth. This was due to higher rental income from the Group’s retail assets. Meanwhile, SPH’s other businesses garnered a revenue of SG$1.2 million, which was 8.2% when compared to last year. Some of this was contributed from its recent acquisition of Orange Valley Healthcare at a consideration of approximately SG$164 million. This was partially offset by lower revenue from the exhibitions business.
On a year-to-date basis, for the three quarters ended 31 May 2017, Group recurring earnings fell 30.6% yoy to SG$158.1 million.
Meanwhile, SPH has completed the sale of 701Search on 30 June 2017 and expects to recognise a profit of approximately SG$150 million from the divestment in the next reporting period. 701Search operates an online classifieds business in Malaysia, Vietnam and Myanmar.
“The Group will forge ahead with its drive to transform the core Media business. We have pursued other growth opportunities to diversify revenue streams. To-date, we have made steady progress with the recent acquisition of Orange Valley Healthcare and our joint venture winning the tender to develop a mixed commercial and residential site at Bidadari,” Alan Chan (pictured), CEO of SPH, said.